Filing the Final Tax Return for Someone Who Died

The final Form 1040 is filed by the court-appointed personal representative (executor or administrator). If none has been appointed, a surviving spouse filing a joint return files it. If there is neither, the person in charge of the decedent's property files and signs as "personal representative."

Write "DECEASED," the decedent's name, and the date of death across the top of the return. The signature line reads "Filing as surviving spouse" or the representative's signature, as applicable.

The deadline does not change. The final return is due on the normal date for that tax year — April 15 of the following year for calendar-year taxpayers — and the usual extension is available.

Married filing jointly is allowed for the year of death. The surviving spouse and the decedent file one joint return covering the full year, with the decedent's income through the date of death.

The two years after. A surviving spouse who has a dependent child and has not remarried may use qualifying surviving spouse status for the two tax years following the year of death, which gives the joint-return standard deduction and rate schedule.

The dividing line is the date of death. Income the decedent actually or constructively received before death (or, for an accrual-method business, income accrued before death) goes on the final Form 1040. Income received after death is taxed to whoever receives it (Pub 559): the estate on Form 1041, the estate's income tax return, if it is paid to the estate; a named beneficiary on their own 1040 for an IRA, annuity, or payable-on-death or joint account that passes directly to them; or the heir the estate distributes the right to receive it to.

• • File Form 1041 if the estate has $600 or more of gross income for the year.
• • File Form 1041 regardless of income when any beneficiary is a nonresident alien. The $600 threshold does not apply in that case.
• • The estate needs its own EIN before it can file a 1041, open an estate bank account, or have income reported to it. Apply for it as soon as you know a 1041 will be required.

If the final return produces a refund, the IRS needs to know who may receive it. Per the Form 1310 instructions, you do not file Form 1310 if either of these is true:

1. You are a surviving spouse filing an original or amended joint return with the decedent.
2. You are a court-appointed or certified personal representative filing an original return for the decedent, and you attach a copy of the court certificate showing your appointment.

Everyone else claiming the refund on behalf of the decedent files Form 1310 with the return.

Income in respect of a decedent (IRD) under IRC §691 is income the decedent had earned but had not received by the date of death. Typical items:

• • The final paycheck or unpaid commissions paid after death
• • Distributions from a traditional IRA or 401(k)
• • Interest accrued but not yet credited
• • Accounts receivable of a cash-basis business

IRD keeps the character it would have had in the decedent's hands and gets no basis step-up. Whoever receives it — the estate or the beneficiary — pays income tax on it.

Medical expenses paid out of the estate within one year after the date of death can be treated as paid by the decedent at the time they were incurred, and deducted on the final Form 1040 (Schedule A, subject to the usual AGI floor). This is the IRC §213(c) election.

The election is either/or: expenses deducted on the final 1040 cannot also be taken as a Form 706 estate-tax deduction. You must file a statement waiving the estate-tax deduction for those amounts.